Posted
by
ScuttleMonkey
on Wednesday October 24, 2007 @05:45PM
from the facebook-laughing-all-the-way-to-the-bank dept.

Nrbelex writes to mention The New York Times is reporting that Microsoft has beat out Google and Yahoo for a 1.6% stake in Facebook. The investment will cost Microsoft $240 million valuing the total site at somewhere around $15 billion. "The astronomical valuation for Facebook is primarily evidence that Microsoft executives believed they could not afford to lose out on the Facebook deal. Google appears to be building a dominant position in the race to serve advertisements online. Fearing it might lose control over the next generation of computer users, Microsoft has been attempting to match and in some cases block Google's plans, even if that effort is costly."

After hearing so much about mySpace I finally surfed it, set up a page and looked around. It's all rubbish. People ask to join your list
of friends to spam you and the interface is clunky at best. I think such a site would be a good idea, but their implementation falls short of the mark
by leagues.

Along comes Facebook, cleaner interface, perhaps better ability to keep crap from showing up in comments or messages people send you. Hopefully if you are spammed
there's an actual admin who gives them the boot, though it's quick and easy to join so an abuser will likely create accounts as needed for pest purposes. When rot sets in people will leave and go
to the next big site, leaving mySpace and Facebook to host an ever shrinking group willing to put up with crap.

Two hundred forty! Million! Dollars!? IIIIII'mmmmmm the CAAAAAT! Seriously this is great news for those who hold ownership in this site, they'll rake in a very considerable profit.

I disagree with the summary saying that it shows the company is worth $15 billion, that's ridiculous. It's an exclusive advertising deal with a small share of the company thrown in for good measure. The real question is, how much of that $240 million is for the advertising and how much is for a share of the company? My guess is that the majority (75+ percent) is for the advertising.

What I really think this shows is that Microsoft thinks Facebook, and not myspace, is going to be dominant soon and for a long time. Facebook has the better interface and the better look/feel, and their user base is exploding. However, I also agree with the parent in saying that people will soon be leaving facebook for greener pastures. If the dot-com boom and embarrassing posting on slashdot about being worthy a lot of money are any indication, the owners should start selling their sharesnow, getting some of the insane wealth in case they can't get it later.

I disagree. People care much less about how clunky the interface is etc than they do about where their friends are. Right now everyone (of the generation that is using these sites ie college students and younger, primarily) and their pet duck is on Facebook and/or MySpace.

These are social sites. They are useless without the people you socialize with being on them too. MySpace and Facebook, thus, have it very good for the future.

The Internet is the biggest Social Networking site on the planet, and all these subcategories of it are going to be less and less important as larger percentages of the populace can build their own little inter-communicative sites.

The Internet is the biggest Social Networking site on the planet, and all these subcategories of it are going to be less and less important as larger percentages of the populace can build their own little inter-communicative sites.

Perhaps the real money is in creating a site which allows people to tie all their memberships together across these social networking sites. Should that happen, I predict lawsuits -- they don't want you to go anywhere else and they'll do anything to stop you within their power. But it would be a neat idea.

Facebook and MySpace are the 21st century equivalent of Geocities. How many billion dollars do you think they could sell Geocities for these days? Remember, Geocities used to be VERY popular with idiots setting up free websites, just like MySpace and Facebook today. Anyone that spends more than $1000 investing in these fly-by-night sites is a complete fool or is looking to cash in on the pyramid scheme.

Wow. Since when has 1.6% entailed a controlling stake? Microsoft doesn't "own" Facebook in any sense of the term. They merely hold a 1.6% stake. Enough to get dividends if it profits, and maybe have one vote out of a hundred at meetings.

Personally, I can't see the founders telling MS to f%&k off when they turn up at a board meeting suggesting that Facebook be renamed to LiveBook.com - $240m can wield an awful lot of unoffical power...

it was hacked recently and many people are making clones from the exact source

Isn't having the source pretty irrelevant? Isn't the community, as in the people using the site, that matter? You could create an exact same site using the same code, call it, Friendster, and if nobody shows up, does it matter?

Get me an "active account" number, and you'll have something. Hell, my open personal Myspace account could be considered active, but I mainly only ever go on it to clean out the spam. Everyone I know is on Facebook already, or transitioning to it. I only have one friend whos resistant to it, and the reason is because he can't fuck up the page like Myspace allows him to. He can stay there for all I care given I can't even look at his Myspace page without wanting to scream about HTML standards.

As a guy who has worked in web development for a long time, I can tell you from personal experience those numbers are completely untrustworthy.

An extremely prevalent pattern is for kids/teens/young adults to sign up 2-20 accounts per actual human. They enjoy the "role-play" elements in taking on new identities. At one time, a site I worked with didn't limit "accounts" by email, it was astounding how many accounts per email we had - this was a kid oriented site. I think the average was 4 and a half or something.

So, even assuming they are all human derived (which they're not, but I have no educated guess on percentage), you can safely halve that figure and then you're STILL not accounting for abandoned accounts. I have two on myspace.:)

There is a real move away from user account stat usage these days, thankfully. I've been mocking it as a statistical tool for years so I feel a certain vindication. More useful now are page views and time per session (this is qualitative generally, but less so than 'account number')

Congrats to MS on purchasing a share in a great product that's clearly jumped the shark. As someone mentioned, the userbase of facebook doesn't have a lot to lose by jumping ship for a better product. Facebook seems like a smarter than the average.com though, perhaps they'll make a long term company out of it.

As a developer on a very large kid-oriented site myself, I share your personal experience with the inflated metric of user accounts. However, MySpace has a very large audience by any account [comscore.com]—certainly more than "nobody"—and that is what I was trying to illustrate.

The real difference between Myspace and facebook. Myspace is already owned by a large mass media company, absolutely no space for a buy in by either google or M$ and of course facebook is basically up for sale to the highest bidder.

The problem with both of these sites in terms of future value, they are simply just a small microcosm of the overall world wide web, doomed to a limited existence. Cheap web serving appliances and IPv6 will be the death of both myspace and facebook.

M$ making the typical Ballmer blunder by buying into a section of the web at inflated prices as it's demise is on the horizon, well, at least to those who have at least some understanding of the changing nature of the internet, as hardware reduces in price, software becomes free and broadband bandwidth grows.

For either google or M$ to buy into facebook is an addmission of their own incompetence in managing their web portals and being unable to create their own desirable virtual community or in the case of both of those companies, to so mismanage their existing virtual communities, that they to lose to relative new comers.

You only buy competitors when you can't compete. As for web advertising dominance, expect a come from behind, old world mass media, fracturing of that business space. They have a depth of expertise, as well as extensive libraries of content. Admittedly slow to the party, which sees them currently behind, but they will leverage their existing media distribution systems to push out and marginalize what is basically just a 'search engine'(google) and an 'OS/office suite'(M$).

Did no one pay attention to how Newscorp sutlely promoted myspace by inserting references to it in their news papers, television shows, cable network and movies (the most interesting targeted ones were references to myspace in Sunday paper cartoons). As well as of course the expected advertising as news articles.

Wow, congrats to those 'hackers'! Now they have a bunch of cold fusion code. Enjoy running that on your warez version of adobe's cold fusion server. Never mind the fact that you can replicate 8/10ths of myspace functionality in a few weeks with a couple of competent coders and not worry about, say, the legalities of that theft. I imagine the code base of Myspace has enough oddity that anyone foolish enough to make a public site without SIGNIFICANTLY modifying that code stands a real chance of being found ou

Some have speculated that this could be a move to drive adoption of the Silverlight plugin to compete with Adobe's flash. There is evidence that could work too. When MySpace was hacked that involved some clever javascript and a SWF, the admins pushed Flash Player 9 (which had added security) on the userbase and it's adoption rate, many have speculated, is largely due to that. One of Microsoft's biggest challenges with unseating Adobe's Flash is it's insanely high adoption. (something like 95% of computers have flash 8) and now they just bought into a userbase of 20 million "early adopters." Will it be effective? who knows. But I would be surprised if we didn't start seeing Silverlight widgets and ads on facebook.

The fact that MS was willing to pay $240 million for 1.6% makes Facebook worth $15 billion, since a company (or anything for that matter) is worth what someone is willing to pay for it.

The profit the company makes is just one of the factors that determines how much investors are willing to pay. Sometimes investors consider other factors more important. In this case MS decided that Facebook was worth $15 billion to them and since there is at least 1 investor willing to pay that much, that is what the compan

The high valuation also represents a belief that Facebook is creating an important new operating system -- one that exists on the Web instead of on personal computers.

I'm not sure how a valuation is capable of representing a belief, but it does reflect an acknowlegement of important trends. Facebook's platform [facebook.com] is similar to other "Web 2.0" RESTful APIs but is pretty simplistic (i.e. CanvasPages--which is basically an IFRAME, alerts, feeds, and privacy settings, etc.). Don't expect a RoR framework or anything close to Google's API.

You really have to wonder if the people writing these articles - and this is the NYT as well - have a clue. I mean words can't really describe how flawed it is to suggest a website API (and as the parent points out, a simplistic & fairly inadequate one compared to others) equates to an OS. It seems that the journo's are happy to get caught up in "beliefs" that - when you actually sit down and say "hang on, lets genuinely have a look at the facts here" - sums up to be a big pile of vacuous SFA. Someone needs to fire a bolt of reality into this lot, we (on here) are all happy to point out the basic truth that it is a bubble and it will burst, but it goes beyond that now - even the supposed objective commentators are blowing air into the bubble.
As for MS's purchase - we all know they have more money than sense - but I didn't realise it was that much.

I'm sorry but this is ridiculous. MySpace was the last Next Big Thing and is losing users to FaceBook at a tremendous rate. Facebook will face the same fate and so will the next one and the next one and so on.

In six months' time Facebook will be "worth" half that and in a year it'll be worth nothing.

I like social media, I think it's highly useful and may very well change the face of the internet in the same way the web changed the face of traditional media like newspapers, but this is Dot Com Bubble 2.0 as far as I can see. Crazy prices for Crazy products. Good on them for making the $$$$ but seriously... it's insane.

Both MySpace and Facebook lost visitors in September, according to Nielsen/NetRatings, a Web-tracking service. The number of unique U.S. visitors at MySpace fell 4% to 47.2 million from 49.2 million in August, and the number of visitors to Facebook fell 12% to 7.8 million from 8.9 million.

MySpace and Facebook have always attracted different crowds. At this point many people have both, but there is one that is what they use all the time and one that is pretty much dead. But there isn't evidence that MySpace is dying, it's just that Facebook has taken the spotlight as being the next big thing. People aren't still talking about Google's search engine capabilities like its 1998 but Google as a search engine is doing just fine, and possibly even gaining users still. Google the company is also exc

They was the first hits I got.I later found the article I had actually read but all the values was in SEK and not US dollar there and the offer from Yahoo was 7 billion, Google 15 billion, Microsoft 2-3.2 billion for 3-5% of the company valuing it for a total of 65 billion or whatever, and text saying he seemed to wait until it was valued at 100 billion.

So the company which offered around 60 billion was the wrong one, and all currencies was SEK but anyway;)It's hard to remember the currencys when most of t

Is probably what I had read, it says Yahoo offered 7 billion SEK september 2006 and Google 15 billion SEK one month later.Zuckerman said no and that 56 billion where more close to the correct value (close to 60 billion so that explains where I got it from.)It also mentions Yahoo tried again this yea

Not invented out of thin air. I read a reuters article too, it specified the percentage. One can reasonably extrapolate the "value" from this percentage, regardless of how ridiculously obscene an amount it may be.

The past couple of days, I've been listening to my co-worker talk about hitting the wrong button and 'hugging' a large group of people. Not only is he freaking out that only the men have returned his 'hug', he is trying to figure out how tell these people that he did not mean it without alienating them.

Seeing this level of wisdom, after painstaking, conservative estimates of revenues and dividends were calculated to come up with this value of $15 billion, which would in the "quaint, old-fashioned" world of people who actually built companies to feed their families and those of their workers be requiring something like a billion of yearly revenue and something like $10 billion in assets, I came to the conclusion that we Slashdotters too can take advantage of this insanity.

Here is what we should do: Each of us starts a corporation, with names like "IgnoramusMaximus' Megacorp Consolidated on the Internet!" (that last bit is important for the "traditional" investors) and then we "sell" to each other our "stakes" in these wonders of modern enterpreneurship for, say, conservatively, 20 million US dollars (or Euros) a share, with the price being "paid" in our equally valuable shares of the other Slashdotter's corporations. If we all say our stuff is worth beeeeeelions, who is to say otherwise! After all, we got web sites and email for these corps!!!

Next thing you know, our shares can be traded on NASDAQ, NYNEX and who knows where else, as they are far in excess the required share price for those markets and I am sure we Slashdotters can create sufficient trade "volume" trading our super-shares via email 20 times a day.

All that remains is for the turkeys, known as the "institutional investors" so start biting! After all they gamble on equally reasonably "valued" and brain-dead "opportunities" such as the above mentioned FaceBook. Why should they care if we have no product, no sales, no assets? That never stopped them before, did it?! And we are on the Internet!

And so dear Slashdotters, I am hereby giving you your way to beeeeeelions of dollars (or euros) as easy as filling some paperwork and registering the name!

So here it goes:

1. Set up a useless Internet corporation

2. Do a home-made "IPO" (complete with all the "buyer-beware" prospectuses as required by the FTC) and trade its shares for shares of other useless corporations, claiming per-share value in tens of millions (by mutual agreement).

4b. Claim your net worth is into billions if you need an actual money loan from a bank for anyting (and you will be right, according to the silly Wall Street definitions)

4c. Wait for gamblers, otherwise known as "investors" to show up and start trading your make-believe corp (and they would not be able to tell a difference from a "real" one anyways). No danger of you getting accused of "inside trading" or "pump and dump" because you, on your corporation's website boldly state that "This company does Dick All, Bupkis and sometimes Didley Squat!" (in small print at the bottom)

Your problem is in step 1. 1999 called, they want their business model back. You see, Facebook is worth 15 billion because investors acknowledge that it is. Money _isn't_ real anymore. Everything is based on faith and trust in the handlers of the money, whether it be the bank, the government or the company. There is no backing of silver or gold to money any more, only trust, and Microsoft, a big player, trusts that Facebook is worth 15 billion and that's all that matters. A pointless company that can't back

That was the whole point of my silly proposal, but it seems it is making some people rather uncomfortable. Too close to the mark I guess!

A pointless company that can't back up it's existance is not worth 15 billion to Microsoft. So yeah, your idea might work until the second web bubble bursts and the tons of sites following your plan already will experience the pitfall of ebusiness when there is actually no b

Facebook is pointless like email, Google, Amazon and Ebay are pointless, as in it has no point unless people use it. People use it, therefore it has a point. But I see where you are coming from, I just disagree with the ends you see.

Here's the way the (investing) world works.1) "fat cat" institutions buy early and sell to suckers before the bubble bursts, raking in huge rewards and using the proceeds to finance more pump-and-dump schemes that the SEC turns a blind eye to because they're in bed with them.2) For the millionth time, the investing culture becomes goggly-eyed and turns the markets into one big glorified casino.3) Ordinary "investors" (overconfident naive people with too much money on their hands) get their money deservedly

I'll admit up front I'm not one of these technology pundits that make endless speculation but something occurs to me. In the big picture doesn't the future of social networking truly depend on the interopability of these social networks? And if so, wouldn't the player that steps up and comes up with a method to bring interop between social networks and then effectively control that method (heck they don't even have to make it proprietary just control the protocol) will be the one you want a stake in if you're yahoo/google/ms?

I'm on Facebook, I enjoy it but it's clear to me it's not worth $15 billion. As others have said the "next big thing" will come along and draw people away again. I can already see how facebook is going the way of MySpace, sadly with the number of applications that people clutter their profile with (myself included!). Then when everyone rushes off facebook then what's facebook worth? Hardly 15 Billion but the market seems to responded positively to this announcement and Microsofts stock price has done well today (because they beat google).

My point is that I believe the real stake will be the provider that brings people the ability to use the service that they want and still make their connections. Otherwise people are blowing their money on things that have no real value due to user flux.

In the big picture doesn't the future of social networking truly depend on the interopability of these social networks?

Exactly. Facebook answers two questions: what are my friends up to and who else do they know? How is that not better done with other technology? Who wants to lock into one company's platform to manage their social life?

Anyone remember Friendster? Yeah, it collapsed under the weight of its users, but long before that it stopped being interesting. Orkut had the hardware and was easier to use

Good point about LinkedIn it skipped my mind. Funny that, because I almost don't think of it as a social network. I guess that really shows how different it is amongst the others and given it's business slant that's where Google needs to be! I have to admit, it's too scary how well the Ads that come in to me on linkedin match up against my job function.

Just because you have a large user base does not mean you have a large source of income. I don't know if Facebook is profitable, but I do have my suspicions that it is grossly over-valued right now. This social networking craze reminds me of a little thing that happened a few years ago. Eventually these companies are going to have to find a way to make money...ads? That's the best idea they've been able to come up with. Eventually though, someone has to buy something for that model to work, and when your user base is a group of people that signed up for a service because it was free don't be surprised when they're not so eager to pull out their credit cards (If they even have them, since, surprise MS, your users are also a bunch of high school students!). The only thing I can think of is maybe MS thinks there is some value in the data, even that I'd say is nebulous at best. This screams of "me-too!" corporate positioning. MS can obviously afford this, they probably weighed the chances of being left out of the social networking fad and losing money on this deal and considered it an acceptable risk. The only major effect it could have would be positive, obviously they can afford it.

As a senior at a major university, I've been using facebook since '04, and I have to say that it's been a pretty important part of the lives of 95% of the students here and at other major universities for a long time. It's been great for keeping in contact with classmates from high school and in other schools. Since we (college students) developed have seen facebook grow and mature for a few years, it's come as sort of a shock to me that there's a debate about facebook's viability at all.
I can't speak t

I'm sitting here in my mid-30s, webdeving against abysmal insignificance since 2000 and along comes some highschool punk and cashes 250 MILLLION DOLLARS for a website totalling a nominal 15 billion in worth. Un-f*cking-believable.

Karma can be tough.

Goes to show a main business rule:Not what *you* think is a cool interweb app is a cool interweb app. If you can think the concept 'cool interweb app' you are most likely more intelligent than 99% of the poplulation and what you think matters zilch against any possible demografic. What your *customers* think, on the other hand, is *all* that matters in business. Be they 250 Quadzillion Facebook users or a board of half-a-dozen... *GASP!*... *SOB*.... MS Execs with truckloads of cash to burn.

The trick here is being able to predict what the aimless, mind-numbingly stupid consumer will use for the next fifteen seconds, and selling it before the dipshits with the money figure out that it wasn't anything at all. Oh yes, and taking that payment in cash, and not in some soon-to-be worthless stocks, because as paper goes, they're really not that comfortable to wipe your ass with.

Google has shown that they are willing to do what they have to do to get users to put as much of their lives on Google as possible. People are talking about how everybody left Myspace six months ago and will leave Facebook in six months too, it seems pretty likely that Google could be the new "Facebook" if they really wanted to.

I really started dislyking Orkut a while ago (I am brazilian, insert jokes/trolling about it here), but the interface redesign and better photo, video and community tools just made it very good.
But I don't see how any of those community sites could be the next thing or change the internet. They are just what ICQ was once, and before what email was, a way for people to find each other and communicate. I don't see how a clear winner will emerge. Probally the market will be segmented as it is now and people w

If I were Yahoo and Google, I'd probably be hunting out these overpriced businesses, making it look like I was oh-so-interested, and then "losing" to Microsoft, wasting its time and resources on meaningless acquisitions.

How do you know they didn't order a case of champaign and have a celebration over at Google?MS is very very afraid of Google. Google is building a monopoly on advertising and they could use that monopoly against MS's monopoly. Google after all supports FOSS software, and I would go so far as to say that MS sees Google as their primary adversary long term. That means given MS's history of business tactics that they are working to try to stop Google's efforts at every turn, and that could also mean spending c

To add a little bit to the previous comments, it was originally for college students, specifically at a handful of top universities. You had to have an email addy from one of them to join. Then they expanded it to all colleges. Now anyone can join, although your "networks" are often still based on colleges or high schools, though there are now city and workplace networks as well. It's got a much cleaner interface than myspace - you can do any of the crazy animated-background-plus-lime-green-text shit to you

Do you have anything for those of us who think that these sites are a den of perverts, morons and the most pathetic and worthless pieces of human detritus to ever inhabit the face of this rather silly planet? Perhaps you can call it EatMyShortsYouFriendlessPussies.com.

Good job showing your ignorance of Facebook. You sound like a fear mongering Parenting magazine from 1997 talking about "chatrooms". How about you do some research and learn that Facebook is designed to assist real life, not define a new one. Facebook friends are usually real life friends and Facebook offers a means of communicating with them that is more versatile than email. Meanwhile, you're posting on Slashdot to people you don't even know...

Not even CLOSE to true, at least not among my crowd (young college graduates). Everyone adds everyone whose name they remember from high school, people that they meet twice in passing at a company event, etc.

That's kind of what I meant when I said real life friends.. I meant people they know in real life, not random people (IE middle school Myspace popularity contests) or internet forums (people you've never met in person).

As for marking this guy/girl TROLL, why? What is wrong with Friendsite? I looked at it, and while I'm have no real reason to join it, I didn't notice anything bad or heinous about the site. Is he being accused of trying to be bought or hunting for suitors?

I REALLY wish Slashdot would require selecting a justification when Troll and such are slammed onto a comment.

this completely distorts the market space for near future acquisition and startup activity.

Exactly! This pretty trivial investment (for MS) raises the cash barrier to entry for new startups and makes it several times more expensive for companies like Google/Yahoo/Ebay/Sun/Apple to buy new technolgies. MS isn't that concerned about crazy runups in Web2 bubble valuations because it's got its extraordinarily profitable Office business just ticking along.

When your kids are in college (Yes, I know they allow High School now, and maybe even younger) I'm pretty sure your adblock isn't going to reach all the way to the college campus. I suggest teaching responsible computing, not taking the same path the schools are (Blocking everything they don't understand: EX, Wikipedia).

I also block it at home too, along with Bebo and Myspace. Not because of perverts or anything though, just that bandwidth is too expensive for me to allow people to chew up gigs of it in a month browsing it. At work we block it for obvious reasons.

I've said this before. No reason to wear makeup. I've never owned any makeup, and I never will. I've never even looked at any makeup (unless someone I'm looking at just happens to be wearing it.) Investing in Cover Girl is ridiculous.